Our Most Read Stories of 2016
From big banks gaining an edge in CMBS to Florida's utility regulator scrapping with credit rating agencies, these are our most popular articles of 2016.
The first commercial mortgage bond offering designed to comply with skin-in-the-game rules was well received by investors; however, few other lenders are in a position to use the same strategy, since it requires a large balance sheet. That means future bank-sponsored CMBS deals may command superior pricing to others' transactions, which in turn would allow the banks to offer more competitive rates to borrowers.
A battle is brewing over the best way to finance the retrofitting of homes to make them more energy efficient. The outcome could make or break the fledgling industry of administrators for Property Assessed Clean Energy programs, which are funded by local governments and repaid via annual assessments on owners’ property tax bills.
Sprint Corp. borrowing against its most valuable asset – the airwaves – to buy more time for a turnaround. Just as some companies sell their building to investors who then lease it back to them, the wireless carrier is entering into a sale and lease back transaction for a portfolio of spectrum licenses granted by the U.S. government. Rather than selling the spectrum licenses (and third-party lease agreements) directly to investors, however, it is contributing them to three special purpose vehicles that will lease the collateral back to Sprint under a “hell or high water” lease, which has extremely limited termination rights.
CLO managers are increasingly looking to non-traditional loan facilities to finance the economic interest in the credit risk that they must hold in their deals under the impending U.S. risk retention rules. Over the past year, insurance companies and other non-banking entities with extensive experience investing in collateralized loan obligations have shown considerable interest in providing these facilities.
Duke Energy Florida marketed $1.3 billion of bonds backed by utility fees as a corporate bond; it managed to convinced many investors, but not the big three rating agencies, which classified the offering as structured finance. The company's regulator, the Florida Public Service Commission, filed complaints with the European Securities and Markets Authority, the body that, since 2010, body has required rating agencies to add a two-letter identifier, “sf,” to ratings of transactions that meet its definition of structured finance
Seven days, or no pay. That’s the idea behind a compensation policy (read “threat of penalty”) introduced late in 2016 meant to solve an age-old problem: slow settlements of leveraged-loan trades. It affects how buyers of syndicated corporate loans that are below investment grade earn interest on loans they have agreed to purchase but not yet taken possession of – also known as delayed compensation.
The Supreme Court's decision in June not to hear a closely watched lending case leaves unresolved some key questions for the U.S. financial industry. Among them: Can marketplace lenders convince investors that loans in excess of state rate caps are safe to buy? Will continued uncertainty impact the market for certain bonds that are backed by consumer loans? And should banks be worried about a potential erosion of their longstanding pre-emption authority?
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